Ciena Paying $25 Million to Settle Suit

ByYuki Noguchi

January 24, 2003

Ciena Corp. said it will pay $25 million to settle a lawsuit that Nortel Networks Ltd. brought against Oni Systems Corp., a firm Ciena acquired last year, that alleged Oni copied technical designs on products without Nortel's permission.

In addition to the cash payment to Nortel, the two companies have agreed not to sue each other for the next two years and may license each other's patents.

As part of the deal, Nortel agreed to drop a separate suit filed against Ciena in November, which claimed the Linthicum, Md.-based fiber-optics company had infringed on Nortel's patents on some of its switch and data-transport products.

"Nortel Networks is pleased with the settlement," said David Chamberlin, a spokesman for the Canadian telecommunications equipment maker.

Glenn Jasper, a spokesman for Ciena, said, "Litigation is both costly and time-consuming, so this was beneficial to both sides." Ciena will take part of the $25 million charge during its second quarter but will pay off the majority of the costs over a longer period of time, Jasper said. The company declined to say yesterday how much of the charge it will take in the second quarter.

Patent-infringement lawsuits are common in the fiber-optics industry, where intellectual property is closely guarded. Ciena has a patent-infringement lawsuit pending against Columbia-based Corvis Corp., filed in July 2000; that trial is set for Feb. 10.

And Cisco Systems Inc. announced yesterday that it was suing Chinese equipment maker Huawei Technologies Co. and its two U.S.-based subsidiaries, claiming they copied at least five of Cisco's patents.